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STATE and local elected officials are responsible for collecting and spending more than $20 billion a year in Washington state, and with these duties they interact, engage and do business with banks. Banking services are an important component of efficient and effective government work.

Michael Waite is a Seattle-based finance professional who was a candidate for state treasurer last year. He currently serves as a senior vice president of operations for a multinational investment company.

I am concerned about this suggestion based on three of my own life experiences. First, as a recent candidate for state treasurer, I focused on what I consider a major problem for Washington — our ever-growing state debt and the burdens it places on future generations. Second, as a finance professional with years of international accounting experience, I have spent significant time warning clients about conflicts of interest that can harm investors. And third, as a native-born Australian, I saw firsthand what happened when my own home territory had a public bank, and the trail of financial hardship and broken promises that were left behind.

I would argue that the activists (and elected officials) who see little danger in creating a public agency to make and manage loans using taxpayer money are ignoring some basic flaws in the government-owned bank (or “State Bank”) approach. Let me start with three of the many reasons they are wrong:

• Conflict of Interest: Our politicians and bureaucrats should be monitoring bank and credit union behavior, and cracking down on bad behavior by banks (as we saw in the recent Wells Fargo scandal cited by some as a reason for public banks). These officials should use the bully pulpit and negotiation skills to achieve fantastic outcomes for Washingtonians.

However, a government-owned bank means that our politicians and public servants are in the competitive mix with private banks, and no longer free of conflict of interest to bring transparency and accountability to their clients (the taxpayers) when monitoring private sector behavior. It also brings politics into decisions on who and what projects receive public loans.

• Administrative mistakes: People make mistakes, which is a normal part of life. When banks and credit unions make mistakes, they spend time and money examining the issues, explaining them to regulators and shareholders, and correcting errors by changing behaviors or paying fines, or both. If we have our own government-owned bank, we will need to have hundreds, possibly thousands, of bureaucrats working to prevent these mistakes from happening and working to fix the errors that inevitably do. Think millions of your tax dollars being spent every year on this new and unnecessary overhead expense.

• Bad debts: A sad side of banks and credit unions is when borrowers can’t pay their debts. This would also happen to clients of any government-owned bank we open, and when it does, the bank would have to take action. This is where you can see huge problems and conflicts happen — as the best option for our state might not be the best option for a politician with an interest in being re-elected (or a friendly donor on the receiving end of the loan). So government-owned banks end up becoming politically focused weapons that are ineffective, and which drain money and resources from our community.

So, instead of moving the public sector into an arena where they have no expertise, let’s have politicians use the bully pulpit and lead by example to set the highest ethical standards for banks and credit unions operating in Washington state.

If those efforts are exhausted, they should use existing regulatory authority to recover damages for our state.

Then, if elected officials and regulators have failed to achieve appropriate compensation and change for Washington taxpayers, as a last resort the politicians can develop a legislative response to address financial industry behavior.

Let’s hold politicians, bureaucrats, banks and credit unions accountable for ethical behavior. A major part of that accountability would be to remind all elected officials that the best way to stop sending Wall Street banks interest payments is to borrow less money, not create a public option for borrowing from ourselves.

Remember, the Washington state interest expense this year ($1 billion dollars) would be enough to pay for more than 10,500 new teachers, or give a 25 percent pay increase to every current teacher.

Michael Waite is a Seattle-based finance professional who was a candidate for state treasurer last year. He currently serves as a senior vice president of operations for a multinational investment company.